Internal Revenue Code (IRC) Section 223 allows individuals who are covered by a compatible health plan, often referred to as a High Deductible Health Plan (HDHP), to set aside funds on a tax-free basis up to the contribution limit to pay for certain out-of-pocket medical expenses. Health Savings Accounts have a triple tax benefit—funds go into the account tax-free, funds grow tax-free, and remain completely tax-free when used for eligible medical expenses. Here are some HSA basics to get you started with your HSA.

HSA Employee Education Guide

Here are some other unique aspects of HSAs as defined in IRC Section 223:

Contribution Limits

Contributions can be made by you, your employer, or a third party (e.g. family member or friend). Contributions can either be made on a tax-free basis through a Section 125 Plan or directly into the account on a tax-deductible basis. The IRS sets the maximum annual contribution limit. Generally, HSA contributions do not have to be prorated; however, certain exceptions and conditions apply. Contributions can be made at any time up until the tax filing deadline, typically April 15.

IRS Contribution LimitsSingle CoverageFamily Coverage
Contribution Limit (2022)$ 3,650$ 7,300
Contribution Limit (2021)$ 3,600$ 7,200
Contribution Limit (2020)$ 3,550$ 7,100
Additional Catch-up Contribution
(for those 55 and older)
$ 1,000$ 1,000

Basic Requirements to Contribute to an HSA

To be eligible to contribute to an HSA, you must meet a few basic requirements.

1. You must be covered by a compatible health plan. The IRS defines the minimum deductible, maximum out-of-pocket, and eligible coverage requirements of an HSA-compatible plan. Your employer benefits representative should be able to indicate if a specific plan(s) qualifies.

IRS HDHP LimitsSingle CoverageFamily Coverage
HDHP Minimum deductible (2022)$ 1,400$ 2,800
HDHP Maximum out-of-pocket (2022)$ 7,050$ 14,100
HDHP Minimum deductible (2021)$ 1,400$ 2,800
HDHP Maximum out-of-pocket (2021)$ 7,000$ 14,000
HDHP Minimum deductible (2020)$ 1,400$ 2,800
HDHP Maximum out-of-pocket (2020)$ 6,900$ 13,800

2. You cannot be covered by any non-qualified health plan as it constitutes ineligible coverage. Examples of ineligible coverage include:

3. You cannot be enrolled in Medicare.

4. You cannot be claimed as a dependent on another person’s tax return.